Volume 61 / Social Sciences

ECONOMICS: THE CARIBBEAN AND THE GUIANAS (except Cuba and Puerto Rico)

ROBERT E. LOONEY, Professor of National Security Affairs, Naval Postgraduate School

THE LAST SEVERAL YEARS have resulted in uneven economic growth for the economies of Caribbean nations (item #bi2002004818#), with some countries moving ahead with solid performances, while others are more susceptible to the worldwide economic slowdown. In the region as a whole, financial development remains an area of great interest (item #bi2001007591#), as does the export potential of the region's main economies (item #bi2002007025#), their progress in agricultural modernization (item #bi2001007568#), and the environment (item #bi2001007592#).

The Dominican Republic has been one of the better performing countries, most notably beginning in the second half of the 1990s (item #bi2003001301#). A stabilization and structural reform program, initiated in the early 1990s, helped to triple the average annual real GDP growth rate from 2 1/4 percent a year in the first half of the decade to 7 3/4 percent a year in the second half (item #bi2003001306#). Growth was supported by technological change (item #bi2001007589#) and rising investment, including substantial foreign direct investment in the electricity, telecommunications, free-trade-zone, and tourism sectors (item #bi2002004816#). However, in 2001, the economy was affected by two external shocks—the economic slowdown in the US and Europe and the September 11 terrorist attacks in the US. These shocks broadly coincided with the introduction of a package of fiscal measures, which had been designed in response to an overheating of the economy in the run-up to the 2000 presidential election. As a result, the economic growth rate has declined considerably in the last several years as investors' concern with increased risk (item #bi2002004828#) may have become a factor, as well as the ability of the educational system to produce highly trained workers (item #bi2003001302#).

Barbados is making fundamental political and economic changes, with its economic performance traced to a variety of interrelated factors (item #bi2002007028#). A new, more defined and independent Barbados is emerging, with significant constitutional changes pending. The island will become a republic, replacing the UK monarch as head of state with a Barbadian president. The country is also taking on a greater role in regional and international affairs, speaking persuasively on behalf of small, developing island states.

The Haitian economy remains one of the problem areas of the Caribbean (item #bi2003001303#). The country has been negatively affected by a variety of factors including the continuing political stalemate and the ensuing decline in foreign financing and private investment (item #bi2003001730#). While there seems to have been some progress in reducing poverty during the past decade in Haiti—the poorest country in the Western Hemisphere—social indicators have worsened again in the past two years as a result of the continued economic deterioration. The country is receiving considerable attention, however, and it appears the authorities have several viable options to improve the country's economic conditions (item #bi2001007585#).

The Jamaican economy continues with a generally poor performance. Following the financial crisis in 1995–96, the Jamaican government adopted stabilization policies aimed at reducing inflation. While successful in that regard, the country's public finances remain unsatisfactory. In this regard, the country's tax system has been examined in detail (item #bi2001007579#), as have the causes of the country's failure to maintain the high economic growth rates achieved in the 1950s–60s (item #bi2002007030#).

Because of the volatility of oil prices in recent years, Trinidad and Tobago's economy has experienced wider fluctuations than most other Caribbean nations (item #bi2002004827#). A key to the country's long-run economic viability lies in the nation's ability to attract direct foreign investment (item #bi2001007572#). An encouraging development has been the increased attention given to the development problems unique to Tobago (item #bi2001007577#).

In this regard many of the economic difficulties faced by many of the smaller countries of the region are finally receiving increased attention, with excellent assessments recently undertaken for: Suriname (items #bi2001007573# and #bi2002007032#), Martinique (item #bi2002004817#), British Virgin Islands (item #bi2002004819#), Antigua (item #bi2002007027#), Puerto Rico (item #bi2002007031#), and French Guyana (item #bi2003001305#).